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Negative interest rates would make borrowing money cheap and saving money expensive, the reverse of what we have now

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Negative interest rates would make borrowing money cheap and saving money expensive, the reverse of what we have now

Article by Laura Grace Tarpley.

The Federal Reserve has already cut the federal funds rate twice in 2020, and there’s debate about whether the agency should lower rates again.

Low rates are often a sign of a struggling economy. When rates decrease, people are more likely stimulate the economy by taking out loans and swiping their credit cards. And as the coronavirus pandemic drags on, the US economy is taking a hit.

Right now, the federal funds target rate is 0% to 0.25%. If the Fed lowered rates again to help the US economy, rates would drop below zero.

Negative interest rates are controversial, but countries such as Switzerland, Denmark, and Japan have already implemented the system.

What would negative rates mean for American consumers? Basically, you would earn money when you borrow and spend money to keep your money in a bank account. […]

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